The Xbox 360 has become the cheapest home console on the Australian market after Microsoft slashed the price of the entry level Arcade model from [AUD] $399 (£191) to $349 (£167).

The mid-range 360 console, with a 20GB hard drive, now sells for $499 (£239). Before the cuts it was $579 (£277).

The high-end black Xbox 360 Elite, which adds a 120GB hard drive, HDMI cables and a free 30-day Xbox Live Gold membership, was slashed from $729 (£349) to $649 (£310).

Xbox Australia group product marketing manager Jeremy Hinton said the company was passing on savings from recent currency fluctuations and lower manufacturing costs.

According to The Sydney Morning Herald, the move means the Nintendo Wii, which was previously the same price as the Xbox 360 at $399 (£191), loses its status as cheapest console in Oz.

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It also makes Sony's PlayStation 3, priced at $699.95 (£335), the most expensive console in the region by $50.

Some retailers, such as Big W, have slashed prices even further than Microsoft's official adjustment, selling the Xbox 360 Arcade for $279 (£134) for a limited time.